Abstract:

The impact of Oregon's Special Use Assessment (SUA)
program was analyzed in relation to farmland values in six
regions. Data for the study were obtained from the Oregon
Landownership Survey. Data were based on 1975 assessment
and ownership characteristics.
Farmland value per acre, including improvements, was
believed to be influenced by the following factors: special
use assessment, gross farm income, population growth rate,
income of owner, occupation of owner, distance to the nearest
urban area, size of tract, and improvements value.
Ordinary least squares was used to test the impact of
these factors on farmland value per acre.
Tax savings, if any, resulting from SUA were expected
to be capitalized into higher farmland values. Study results
indicate that SUA did increase farmland values in
four of the six regions. In the Coastal region, SUA on
unzoned farmland increased values by $932 per acre. In the
Valley region, SUA on exclusive farm use (EFU) zoned and
unzoned farmland increased values by $977 and $1721 per
acre, respectively. SUA increased unzoned farmland values
by $1226 per acre in the Southwestern region but had no significant
impact on zoned farmland. The value of zoned and
unzoned farmland in the Northcentral region was increased
by $453 and $865 per acre, respectively.
SUA did not have a significant impact on zoned or unzoned
farmland values in the Southcentral or Eastern regions.
Therefore, it is assumed SUA does not provide tax
relief in these regions. This result may be due to the
large agricultural tax base in these regions. A large portion
of the tax base is reduced by SUA, which necessitates
an increase in the tax rate to maintain the same level of
county revenues. Therefore, little if any tax relief is
realized by the participating farmland owners.
The restrictive effect of EFU zoning was expected to
offset tax benefits resulting from SUA. As indicated above,
there was a difference in the impact of SUA on EFU zoned as
compared to unzoned land in the Valley, Southwestern,and
Northcentral regions. The impact on zoned land was consistently
smaller than on unzoned land in all regions (except
the Southcentral where both were not significant).
Most of the other variables in the model had the expected
signs. Those that did not were not significantly
different from zero (except for the distance variable in the
Valley region which was explained after closer analysis).
Tax savings and the resulting increases in farmland
values represent a redistribution of income from nonparticipants
to participants in the SUA program. In order to
determine who was benefiting from SUA, participants were
compared to nonparticipants on a number of ownership characteristics.
Participants and nonparticipants did not differ
on all characteristics in all regions. However, where there
were differences, participants were more likely to be residents,
farmers, own land further from urban areas, not have
plans to sell their land, own larger acreages, and be in
higher income and net worth classes compared to nonparticipants.
The tax saving resulting from SUA may be sufficient to
prevent a farmer from being forced out of farming. However,
the program is not designed to prevent farmland conversion
if the owner desires to change use. A circuit-breaker tax
program for farmers and EFU zoning merit closer attention
as possible alternatives of providing tax relief and farmland
preservation.